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Does Avadel Pharmaceuticals Have The Potential To 10-Double?

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Hot biotech stocks


  • Avadel has in-licensed a potential blockbuster product.
  • Noctiva Avadel has an ongoing Phase 3 study for its FT218 compound and a positive outcome could be a major catalyst for the stock.
  • Avadel already has a cash flow generating in-licensing busines.


At present, Avadel (NASDAQ:AVDL) is one of my favorite biotech stocks. And this is because of the combination of these facts:

The availability of several markets' products a high-potential asset in the pipeline (FT218) which is currently in a Phase 3 study the newly in-licensed product (Noctiva) which has a huge market potential.

Dr. Sharma, who I respect a lot, wrote a subscriber-only piece about Avadel. In it, he pitched the Phase 3 for FT218 in narcolepsy as the reason to get into the stock. I don't fully agree with him, and I'll explain why.

Any Phase 3 has 40% failure risk. This rate is for Phase 3 studies that are continuations of positive Phase 2 studies. Now, this is my concern. There is no Phase 2 data for FT218 to show that it is doing what is intended to do. It has a Phase 1 PK study which could work as Phase 2. But considering the fact that the compound is already being used in narcolepsy, we can increase the Phase 3 chance of success to a maximum of 70%.

However, a 30% risk of failure remains. So, I'll go on to say that the ongoing Phase 3 study is a pitfall (risk) rather than a reason to get into AVDL; since if it fails, it will bring down the stock (but not be a determent to the stock price). Kindly check this video where I explain how you should trade the stock and avoid the Phase 3 pitfall.

My aim for buying AVDL is the recently in-licensed product (Noctiva). Why? Because it is already approved, is the ONLY FDA approved product for nocturia due to nocturnal polyuria (no competition), and has a huge potential.

So let's go through each of the aforementioned points to see if Avadel

This article was written by

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The opinions are mine and are not intended to be used as a personalized investment recommendation. Please note I am NOT a certified financial adviser.”

Analyst’s Disclosure: I am/we are long AVDL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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